Tom Whitty

'I'm tired of the weekends spent travelling from one underquoted property to the next, only to be left feeling like and idiot when an auction opens above what would have been our final limit.' Photo: Greg Newington

Oh man, I'm tired. I'm tired of the endless emails from my ever-optimistic girlfriend. The ones with links to real estate listings of rundown, two-bedroom, inner-city dives that neither of us really want to live in and, together, we can't actually afford.

I'm tired of the weekends spent travelling from one underquoted property to the next, only to be left feeling like an idiot when an auction opens above what would have been our final limit. I'm tired of the car trips back to our rented home, with my hopeful girlfriend talking about how the next property might be the one where we can raise some kids together.

I'm tired of explaining to my peers how negative gearing works, and then explaining why allowing investors to speculate on the housing market is to the detriment of our generation. I'm tired of the politicians who have consistently avoided addressing Australia's housing affordability issue over the past decade.

Frustrated: Tom Whitty Photo: Supplied

I'm frustrated by the affordability studies commissioned by the government that recommend an adjustment or cessation of negative gearing, only for the same politicians who commissioned the report to ignore these recommendations.

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I'm bemused by the existence of the Foreign Investment Review Board, and the government's argument that ''foreign investment in residential real estate should increase Australia's housing stock''. I understand our politicians' motivation for not wanting to improve affordability, but it doesn't make it any easier to accept.

On the one hand, you have young first home buyers who are somewhat naive, attempting to enter the housing market with huge mortgages without questioning why owning a modest home is near impossible in this city. On the other, you have an ageing population that needs to retire. If the value of their biggest asset goes up when they sell it to downsize, they have more dollars to fund their retirement.

These baby boomers are also likely to be investors, and taking away the tax breaks that come along with speculating on the housing market would inevitably lead to backlash on election day. You have to ask, if those being duped are too naive to complain, and those profiteering are too valuable to upset, is housing affordability a problem for our politicians, or a gift?

I'm tired of the subsequent lack of enforcement of regulation in the real estate industry. I'm tired of the sharks and the spruikers and the snake oil salesmen. I'm tired of the media coverage of this issue that consistently goes to these same people for ''expert comment'', and I'm sick of reading about how the market is about to ''pick up'' and that ''now is the time to buy''.

I'm outraged when I read the occasional report that goes so far as to make the argument that those of us that belong to Generation Y (the renting generation) are too greedy and lazy to know what's good for us. The irony of such a statement is not lost on me.

I'm saddened that both my girlfriend and I will have no choice but to work well into our 30s so we can squirrel together a deposit for that two-bedroom dive she's so sure is just around the corner.

I'm saddened we are being made to delay starting a family, when it's all she wants. And I'm saddened that so many people who are approaching retirement will react to this with a ''cry me a river'' statement, when they know full well they never had it this tough.

I'm tired, and I want to rest my head on a pillow on a bed in a home my optimistic girlfriend and I can call our own.

I'm tired. And we haven't even had kids yet.

Tom Whitty is a TV producer and freelance writer.

@twhittyer

870 comments

Yes yes yes. Something should be done about negative gearing for sure. Of course nothing will be done because our political system is about consolidating and maintaining power, not governing in the interests of the people.

Commenter

Entropy

Location

Lane Cove

Date and time

April 05, 2013, 12:43PM

Dude, so true. But for some reason.... people are very keen to defend their right for their interests not to put first...... its really weird... like some kind of mass psychosis......

Commenter

Amen

Date and time

April 05, 2013, 1:22PM

The best way to explain it, is as that you arrive late to a monopoly game party, everything is bought up, the remaining players are cashed up yet you start with a minimal amount, and when they go around trading their properties they sell it 3 to 4 times their original price, every time increasing the factor; that sounds fun and/or fair?Or another way to put it is as an official, goverment sanctioned ponzy scheme.

Negative gearing actually helps get more places built as it encourages investors into the market. Supply of land is not the issue - Sydney and Melbourne has heaps of land but getting to it is the issue. This is pretty much where the problem lies as it artifically inflates the value of the existing housing stock. Charging developers or new home owners $100k upfront for infrastructure that will last 100 years rather than deferring it over say 10-20 years is also a massive disincentive. So if you want to blame the baby-boomers, limit it to its members who control the planning and infrastructure process.

Commenter

james

Location

sydney

Date and time

April 05, 2013, 1:24PM

You're wrong about negative gearing. It's not the cause of the problem. It's not even a problem. If you remove negative gearing I'll increase the rent I charge on my properties to cover all outgoings (including depreciation). All landlords will do the same. Renters won't have a choice but to pay because in a market of <2% vacancy rate you don't have much choice (and even Redfern can take 30 minutes to get to work so it's unlikely people will move far out to the west for cheaper rentals - which will also increase in a similar fashion). Then you'll be paying higher rents. As a result this will make investment properties even more attractive because cash-flow is increased. more investors will enter the market. More investors means more demand (supply won't increase any time soon because it takes a long time to build a new place) which means higher prices. higher prices and increased cash-flow will entice even more investors into the market.

All that will happen is higer rents and higher prices.

The cause of the problem lies in the first paragraph. Two bedrooms in the inner city!

Try reducing your expectations. If you want to buy you have to move to an area you can afford in a property that is within your budget. Boomers did this. GenXs like me did this.

The property market is a matter of supply and demand. If everyone wants to live in the inner city to be close to work then this will put upwards pressure on prices and only the wealthiest will buy in.

Commenter

Bender

Date and time

April 05, 2013, 1:24PM

Careful what you wish for Gen Y. Neg gearing might need changes but we need some investors. I certainly didn't want to buy and sell each of the 7 times I moved in my transient twenties.

Supply and demand has more effect than neg gearing. He wants two-bedroom, inner-city. I bet its quaint terrace house with modern bathroom and kitchen. Just like everyone else, including the downsizing baby boomers he criticises that want to live there themselves. There are X number of such properties, and Y people who want them. Y is bigger than X, price goes up.

Sydney's future is apartments, especially for first time buyers. Get used to it or move further out. (By the way I'm a Gen Y recent buyer, not a baby boomer)

Commenter

Rob

Date and time

April 05, 2013, 1:29PM

So true. We have 2 kids, have tried to join the housing market for 10 years and failed. We cant afford the dumps we look at and we hate them anyway. All this whist we rent a great house at half the price we could buy it for & the taxman pays.

All of Australia's income tax problems would be solved by ditching negative gearing.

Commenter

richt

Location

Sydney

Date and time

April 05, 2013, 1:31PM

Gee, don't poor Gen Y have it tought. When I started in the housing market (over 25 years ago) I couldn't afford to live in cosmpolitan inner city areas either. I bought a unit in Sutherland - because that was where I could afford (and, unlike the author, I didn't have a girlfriend either).

After 3 years I had paid down the mortgage sufficiently that I could afford to move somewhere interestng, so I rented out the place in Sutherland and together with a mate (still no girlfriend on the horizon) shared/rented a place in Chippendale. Ten years ago (now married and in my 30s) I sold the place in Sutherland and bought my own home in an area I want to live in.

I guess I did it wrong. I should have gone to the media and whinged.

Commenter

Walkesby

Date and time

April 05, 2013, 1:33PM

Bender/James, you are both wrong.

Firstly James negative gearing has proven to do nothing to improve supply - if it did we would have 5% rental vacancies.All it does is put pressure on prices as those with negative gearing opportunities are able to gain an immediate tax break compared to a home owner.

Secondly, Bender - by your logic prices are held down by negative gearing where landlords can raise prices based on their input cost rather than market demand /pricing / capacity to pay - What NONSENSE. Today property won't rent when the price is too high - it just sits on the market until the landlord reduces the price.

The problem of home affordability lies in supply side restrictions and tax breaks that favor investors - fix that and home affordability will improve and our economy will be strengthened.